Life Insurance

If you are required to pay child support or spousal support, then you will
normally be required to have life insurance as security for this obligation.

"Why do I need to obtain life insurance?"

If you were to pass away without having life insurance in place, your ex may
not have sufficient funds to look after himself or herself, or the children.

Note that your liability for child support or spousal support continues after
you pass away. According to section 34(4) of the Ontario Family Law Act, "An
order for support binds the estate of the person having the support obligation
unless the court provides otherwise."

"Whatís the law regarding life insurance?"

Section 34(1)(i) of the Ontario Family Law Act states that: "In an
application under section 33 [order for child support or spousal support], the
court may make an interim or final order requiring that a spouse or same-sex
partner who has a policy of life insurance as defined in the Insurance Act
designate the other spouse or same-sex partner or a child as the beneficiary
irrevocably."

"What if I donít have any life insurance - do I need to obtain it?"

Normally, yes. Although the above section of the Ontario Family Law Act only
speaks about designating an existing policy of life insurance, the courts have
interpreted other sections of the Ontario Family Law Act and the Divorce Act to
require a person to purchase a policy as security for child support. They would
likely do the same thing for spousal support.

The leading case on this issue is the Laczko case (1999, Brampton). In this
case, the parties had settled all issues arising from their separation, except
the issue of life insurance. According to the agreement, the husband had to pay
the wife child support. The wife argued that the husband should obtain a policy
as security for the child support. The husband disagreed.

In this case, the judge found that the sections of the Family Law Act,
Divorce Act, Federal Child Support Guidelines and Provincial Child Support
Guidelines which permit a court to require security for child support should be
interpreted to allow a court to be able to require a life insurance policy be
obtained. There have been other cases that have found this as well.

Normally in these circumstances, term life insurance is best. This is
because it is the cheapest. As well, there are policies available that can
be tied to child support or spousal support.